EDC eyes P7B from bonds

MANILA, Philippines - Lopez-led geothermal power producer Energy Development Corp. (EDC) plans to raise as much as P7 billion through bonds that will bankroll its expansion projects.

EDC said it filed a registration statement seeking the approval of the Securities and Exchange Commission (SEC) for the issuance of bonds.

The power producer plans to sell an aggregate principal amount of P5 billion, with an oversubscription option of up to P2 billion.

In its registration statement, EDC said the bonds are composed of two tranches: seven-year fixed rate bonds due in 2020 and 10-year fixed rate bonds due in 2023.

“The proceeds from the issuance will be used primarily to support its business expansion plans, finance capital expenditures and fund general corporate purposes,” EDC said.

EDC has tapped BDO Capital and Investment Corp. as issue manager and sole bookrunner.

Local credit rater Philippine Rating Services Corp. (PhilRatings) has assigned a rating of PRS Aaa, the highest score, for the planned bond sale.

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” PhilRatings said.

PhilRatings said the credit rating reflects EDC’s strong credit position; sustainable revenue stream and strong cash flow generation; and financial flexibility as well as improved debt profile that lessens operational and financial risks.

A credit rating is essential prior to the issuance of bonds. It gives the public a gauge whether the offering is a sound investment instrument.

To date, EDC has an outstanding P12 billion bond issuance (P8.5 billion due in June 2015 and P3.5 billion due in December 2016).

EDC has set aside P32 billion for its capital expenditures program this year, up from P22 billion last year, as it strengthens its foothold in the country’s growing renewable energy industry.

Its profits jumped to P10.4 billion last year from just P615 million in 2011 given higher electricity sales.

EDC, the world’s second largest integrated geothermal company, is into the exploration, development and optimization of geothermal fields, as well as the operation and maintenance of the geothermal power plants with an aggregate capacity of 1,130 megawatts (MW).

Aside from geothermal projects, the company also owns and operates the 132-MW Pantabangan-Masiway hydroelectric plants and has investments in wind energy projects in Ilocos Norte and other provinces.

Outside the Philippines, EDC has geothermal projects in Peru (Quellaapacheta and Chocopata) under a joint venture with Hot Rock Ltd. of Australia. EDC also has three geothermal concession areas in Chile.